Click fraud refers to unethical (usually) competitor ad clicks designed to increase competitors’ marketing costs. All of the big players are paying special attention to click fraud and taking action against offenders. To avoid click fraud, stick with reputable SEM platforms. If you are just starting with PPC, you may want to concentrate on only one major platform. Figure 16-1 depicts the AdWords platform.

Most click fraud is now automatic—using bot networks that spoof IP addresses—and is unlikely to be competitor-driven. Most click fraud occurs in the content network by AdSense publishers looking to unethically drive up their AdSense revenues.

Figure 16-1. Google AdWords platform

As shown in Figure 16-1, advertisers create ads in AdWords that Google uses on its search result pages as well as on its content and search partner sites. Website owners use AdSense to generate Google income by showing Google ads. Web searchers and the partner site visitors click on Google AdWords ads, generating a revenue stream for Google and its associated partner sites.

Having the biggest reach has its advantages. If you have to decide among the biggest players, stick with Google AdWords. In a nutshell, AdWords provides by far the most comprehensive set of tools and features when compared to any of its competitors.

Let’s start by looking at an example. Say you have a website selling one product. Let’s assume the following information is true about the product:

Product A
======================
Total Cost with S&H: $20
Online Sale Price: $50
Total Margin: $30
Acceptable Margin: $15

Your problem is that you have little or no traffic coming to your site, so you are now entertaining the possibility of using a PPC platform to help you with the lack of visitors coming to your site by way of organic search results.

Before spending your advertising money, you will do better by doing some basic math and research. Given the information in relation to Product A, it should be clear that to keep a part of your profit you will need to have a sufficient conversion rate so that the net margin is greater than zero (once you subtract the costs of your PPC campaign).

Beating the breakeven point is really not the objective here. You need to consider other associated costs, such as your time. Therefore, you will need to conduct a more detailed cost analysis before coming up with your acceptable margin. For the sake of this example, let’s assume your acceptable margin is $15.

In our example, many other (unknown) variables are also at play, as shown in Figure 16-2.

Figure 16-2. The unknown variables

Since you are not getting any organic traffic, you may not know much about your eventual landing page conversion rate. Conversion rates vary per keyword, which makes your situation even more interesting (and complicated).

Let’s assume you have done all of your research. You estimate that your cost-per-click (CPC) will be $1 (for the sake of simplicity). This means you will need at least 1 visitor out of 30 to buy your product so that you can break even. This also means that to keep your acceptable margin in your pocket, you will need exactly 1 sale for every 15 visitors (or ad clicks).

Another unknown variable is your click-through rate (CTR). You do not know how many people will be clicking on your ad and at what frequency. Although PPC platforms will estimate your traffic, there is no guarantee that these numbers will come true. Your CTR depends on many factors, including the current keyword demand, your ad copy, and your relative ad position.

Let’s look at another example. Suppose you are selling another product with the following details:

Product B
======================
Total Cost with S&H: $10
Online Sale Price: $20
Total Margin: $10
Acceptable Margin: $5
CPC: $0.50
CTR: 0.5%
Landing Page Conversion Rate: ?

What is your required landing page conversion rate to break even? Here is how we could calculate the breakeven point:

Number of Clicks = Margin/CPC
                 = $10/0.50
                 = 20 clicks (absorbs entire margin)

In this case, the required landing page conversion rate is 1/20, or 5%. When you add multiple keywords to the mix, most (if not all) of the variables will change. The goal of all campaigns is to make a net profit.

Another, more important question is what is your required landing page conversion rate to reach your acceptable profit margin? Here is how we can calculate this information:

Number of Clicks = Margin/CPC
                 = $5/0.50
                 = 10 clicks (absorbs allowable margin)

In this case, the required landing page conversion rate is 1/10, or 10%.

The planning and research phase of the SEM process is similar to the first two phases of the SEO process. In this phase, you are learning about the products and services you are about to advertise, or you are performing additional research and analysis based on your existing campaigns.

The input to this phase includes allocated advertising budgets, product and service information, existing campaign information, and any other information necessary to formulate a new SEM campaign. A large part of this phase is concentrated on keyword research and planning for content creation. In other words, you are brainstorming your keywords and content ideas, and creating your PPC landing pages and ad copy.

Chapter 11 covered many different ways to find keywords. In our coverage of Google AdWords, we’ll discuss additional keyword topics in a PPC context. The output of this phase can include a keyword list(s) and content requirements.

The input to the content creation phase includes defined content requirements from the preceding phase as well as any defined (targeted) keywords. Before your PPC campaign can begin, you must have appropriate (actionable) content. Unless you are using PPC for your brand or company awareness, you will almost always point your PPC links to some sort of landing page, and almost never to your home page, as it is too generic.

For example, retail sites selling lots of products may redirect visitors to a specific product page. Sometimes this page may already exist in a satisfactory form. In other cases, the advertiser will create a special landing page if the product page is not converting.

Big established retailers do not need to create fancy landing pages, as visitors usually know who they are and know what to expect, which speaks to the power of brand trust. All landing pages have one thing in common: their main objective is to capture visitors’ attention to such an extent that they complete the presented call to action. A call to action can be anything, including completing a survey, purchasing a product or service, or registering on the site.

The output of this phase includes any content required to support the PPC campaign. This can include ad copy, landing pages, and URL information. At the completion of this phase, you should be ready to start your PPC campaign.

The campaign creation phase uses the output of the previous two phases as its campaign input. In this phase, you do two things. You upload the files necessary to support your landing pages to your web server. Soon after, you create your campaigns, ad groups, and ads while utilizing your planned keywords, budgets, and so forth.

In this phase, you monitor your campaign while analyzing the need for any corrective action. You should also be looking for ways to improve your existing campaign. Your competition is not standing still.

The output of this phase could be an assessment/audit from which you can take further action. This action could be making small refinements or improvements, or something as drastic as pausing your campaign and starting all over again.

The campaign refinements phase is when you take care of the minor and major corrective actions you identified in the preceding phase.

To create a Google account for AdWords, browse to http://adwords.google.com. Figure 16-4 shows screenshots of the main steps.

Figure 16-4. Google AdWords installation

Your screens may not look the same as those shown in Figure 16-4, but the registration process should be straightforward. In one of the initial registration screens, you are presented with a choice between using the Starter Edition or the Standard Edition. Choose the Starter Edition if you are completely new to PPC. Otherwise, choose the Standard Edition.

After you fill out the registration form, you will be instructed to log in to your account to provide your billing information. With AdWords, you can choose to pay either after you get clicks or in advance of future clicks. You can pay either by credit card or a bank transfer. As of this writing, Google charges a one-time activation fee of $10 on the creation of a new account.

By default, the first thing you see when you log in to AdWords is the Account Snapshot home page. You are presented with your account summary information as well as the menu shown in Figure 16-5. Note the menu options. If you hover your mouse pointer over each menu item, additional menu options will appear.

Figure 16-5. Account snapshot

Navigating through AdWords takes some time to get used to. Figure 16-6 shows all of the current options on the main menu.

Figure 16-6. AdWords main menu

Clicking on the Home button brings you back to the Account Snapshot page, which provides a Dashboard-type view of your account. You will find various sections, including alerts, account status, announcements, keyword performance, active campaigns, campaign performance, help, and tips.

Clicking on the Campaign button brings you to the Campaign Summary page. On this page you can set up and modify your campaigns, campaign ad groups, and ads for each of your ad groups. This section of AdWords uses the menu structure shown in Figure 16-7.

The Reporting menu item allows you to create and run custom performance reports, use Google Analytics, and use the Website Optimizer tool to increase your conversions. The Tools menu item allows you to go to specific AdWords tools, including the Keyword tool, the Conversion Tracking tool, the Ad Diagnostics tool, the Campaign Optimizer, and more.

The last two main menu buttons are labeled Billing and My Account. In the Billing section, you can see your click and cost summary. You can also change your billing information. In the My Account section, you can change many account settings in addition to letting others manage campaigns associated with your account.

Figure 16-7. Campaign menu and associated actions

You can use three access levels or user roles: administrative, standard, and reports.

Creating your campaigns is a straightforward process. From the AdWords home page, select Campaigns→New campaign, which should bring up a page with a rather large form that you need to fill out.

In Figure 16-8, you can see several sections of this form. On the Settings page, in the General section under the “Campaign settings” heading, type your campaign name in the “Campaign name” text box.

Move down the form to the Audience section. For Locations, choose the geographical location in which you want your ads to appear. Do not select the “Bundle: All countries and territories” radio button unless you really do want to target the entire world. Most people will select their own country or countries whose inhabitants speak the same language they do. In the example shown in Figure 16-8, AdWords preselected the Country option, which in my case is Canada. If you click on the “Select one or more other locations” link, AdWords opens another window, giving you all your possible options while showing your selection on a dynamically generated map.

Figure 16-8. New campaign: Part 1

Moving to the bottom of the portion of the form shown in Figure 16-8, you can see the Languages section. AdWords automatically selects your default language (in my case, English). You can change that by clicking on the Edit link. At the time of this writing, AdWords allows users to select the languages shown in Table 16-2.

Figure 16-9 shows the remainder of the form you need to fill out to start a new campaign. If you expand the “Demographic (advanced)” section, you can set bidding preferences for specific demographics on eligible content network sites. As of this writing, Google allows you to choose demographic options based on gender and age. For age demographics, you can choose among several age groups, including 0–17, 18–24, 25–34, 35–44, 45–54, 55–64, and 65+.

Moving down the form, we reach the “Networks, devices and extensions” section. The default option is “All available sites and devices.” You can customize this by clicking on the “Let me choose” radio button. If you choose to customize, you are presented with several options divided into three sections: Search, Content, and Devices.

The Search option allows you to include or exclude Google Search as well as sites using Google Search. In most cases, you want to keep this option on. The Content option allows you to include or exclude the Google Content Network. It is unwise to have the Content and Search options “on” in the same campaign, as preferred ad group structure, ad copy, and budgeting will likely need to be different for the Google Content Network and the Search network. If you are just starting and you are in an English-speaking country, you may want to exclude these options. Finally, the Devices option allows you to include or exclude different Internet devices, such as PCs, notebooks, iPhones, and so forth.

Figure 16-9. New campaign: Part 2

The next section of the form is labeled “Bidding and budget.” For “Bidding option” you can choose either “Basic options” or “Advanced options.” If you choose “Basic options” (the default), you can choose to perform manual bidding whereby you set up your maximum CPC, or automatic bidding to let AdWords choose an optimal price for you. Most people choose manual bidding, which is also the default. In the Budget section, you are asked to enter your daily budget. If you are not sure what that is, start with the lowest possible amount.

If you choose “Advanced options” for your “Bidding option,” you are presented with additional options, including “Focus on conversions” (based on the cost per action, or CPA, model) and “Focus on impressions” (based on the cost per 1,000 views, or CPM, model).

The “Focus on impressions” option is good if you are targeting ad visibility. Ad costs are calculated based on 1,000-impression bundles. The “Focus on conversions” option allows you to set maximum costs you are willing to pay for each conversion. To quote Google:

Any conversion-focused automation in AdWords requires use of AdWords conversion tracking. It is imperative that the accuracy of the tracking be confirmed prior to using any CPA-based automation.

More advanced campaign options are also available. These include ad scheduling, ad delivery, ad rotation, and frequency capping. If you are just starting out, you may wish to ignore these advanced settings.

Once you’re done with all of your form entries, click on the “Save and continue” button. If you have any form errors, AdWords will not let you continue and will ask you to make corrections.

After creating your campaign, you are ready to create your ad groups. Each campaign can have multiple ad groups, and each ad group can contain multiple ads. Figure 16-10 shows the “Ad groups” screen. You may wish to create ad groups based on different keywords.

Figure 16-10. Ad groups

To create an ad group, simply click on the “New ad group” button. You should see a form similar to the one shown in Figure 16-11. This form presents many options. Figure 16-11 shows only the top part of the form.

You do not need to complete this form at this point if you are not ready. You can simply enter the name of your ad group, add a small bid amount at the bottom of the form, and save the form, effectively setting this ad group in “pending” mode.

If you decide to fill out the form, start by entering the ad group name. Moving down the form, you can enter your first ad followed by your targeted keywords. You are also presented with an option to obtain a detailed traffic estimate report.

The last two sections of the form are labeled Placements and “Ad group default bids (Max, CPC).” The Placements section allows more granular control of ad placement at Google Content Network sites. The “Ad group default bids (Max, CPC)” section allows you to specify your default CPC as well as managed and automatic Google Content Network placement bids.

Before we start creating AdWords ads, let’s talk about how you specify keywords within AdWords.

Figure 16-11. Ad group entry form

Broad match keywords get more traffic than the other types, as they try to catch similar (semantically related) word variations. According to Google:

Using the broad matching method allows you to discover additional converting keywords that you may have missed in your keyword research. Table 16-3 illustrates the concept of broad matching.

Google’s expanded matching for broad match means terms not explicitly in the keyword list may be matched based on Google’s history of user behavior. For example, it is possible that an ad for prom dresses may match a query for evening gowns if Google determines that the terms prom dresses and evening gowns are interchangeable from a user’s point of view. This is a relatively recent addition to Google matching and makes a negative keyword strategy incredibly important if broad matching is being used.

You can use the Conversion Optimizer feature of AdWords to highlight your broad match keywords with the highest conversions. Using broad match keywords is a good idea when you do not have too many keywords to start with.

Quoted keywords represent an exact phrase match. In other words, the order of words found in quotation marks must be honored. A phrase match is more conservative than a broad match, as you are specifically looking for a particular keyword phrase in a specific word order.

With a phrase match, you are telling AdWords to show your ads for any keyword queries containing the phrase plus any other terms before or after the phrase. Table 16-4 illustrates the concept of phrase match conditions.

To specify an exact match condition, you surround your keywords with square brackets. This is the strictest and most conservative of the matching option. Table 16-5 illustrates the concept of exact keyword matching.

Using the exact match method allows you to conduct highly targeted (narrow) keyword matching. The search volume will be lower, but it tends to generate highly qualified converting traffic.

The negative keyword match operator, -, helps you prevent showing your ads for irrelevant searches. Let’s suppose you are selling apples at your online grocery delivery shop. If you type in the word apple in Google, most of the results that come up are related to Apple Inc. In this case, you need to weed out all the searches that are related to the computer maker. Table 16-6 illustrates this example in more detail.

You should spend some time finding relative negative matches. The more precise you are, the more you save by eliminating your money-wasting clicks. You can find negative keywords in many ways. Let’s examine two of the most basic methods.

The first method involves using a search engine. Go to Google and search for your targeted keyword. Note any irrelevant results and their associated terms (words). Use those as your negative keywords.

The second method involves doing some in-house inspections. You can look at your current web server stats and see which keywords are completely irrelevant to your website. Add those to your negative keyword list.

You can classify the examples in Table 16-6 as negative broad matches. You can also use the negative match operator with the phrase and exact match operators. For example, let’s say you want to post ads for people searching for a paid PHP script, but not a CGI script. You could use the following negative keywords (phrase matches):

-"cgi script"
-"cgi program"

Similarly, you could use the negative exact matches as follows:

-[cgi script]
-[cgi program]

You can be very creative when picking your negative keywords. Negative keywords save you money, so use them liberally.

Let’s move on and explore how to create ads.

In Figure 16-12, you can see that there are five fields that every ad must have: a headline, two description lines, a display URL, and a destination URL. Also note that the fifth field (the destination URL) is invisible when shown on the search results page. Table 16-7 lists the basic text ad field limits for Latin and double-byte characters (for China, Japan, and Korea).

Google states that the maximum allowable number of characters may be smaller in some cases when using certain Latin wide characters.

Writing Google ads requires creativity. For starters, you may want to use your company name and company brand as parts of your ad. Numbers, initial caps, exclamation points, and question marks are all part of the ad copy mix.

Google has very strict editorial guidelines. For example, using all caps is prohibited. Also, you can use exclamation points only in description lines (not in titles), and you must back up any superlatives with web content supporting your claim.

Use actionable words and let your ad be perceived as the answer to the searcher’s question. Probably the easiest way to get ad copy ideas is to look at your competitors’ ads. AdWords has some built-in ideas as well. Let’s look at the concept of dynamic keyword insertion and keyword capitalization.

{keyword:default text}

Headline.: {Keyword:Handbags} for Sale
Line 1...: Only 10 Units Left in Our Stock
Line 2...: Find Deals on New and Used {Keyword:Handbags}
Disp. URL: www.tophandbags.ca
Dest. URL: http://www.tophb.ca/c.do?kw={keyword:nil}

Website conversion can be defined as a set of predetermined actions or clicks performed by each web visitor. The set of actions could be as simple as signing up for your newsletter. Every conversion can be thought of as having a predetermined starting point and an equivalent predetermined ending point.

In web marketing, conversion means a user coming to a particular landing page, viewing and executing the provided call to action (CTA), and arriving at the final converting page. In that sense, the conversion rate is the number of conversions divided by the total number of page views for that particular landing page. You can also define this type of conversion as the number of people who reach the end point page divided by the total number of people who view the particular starting point landing page. Multiply the resulting number by 100 to get the percentage rate.

Marketing folks typically use conversion data when showing campaign sales data. In this case, the starting point could be a product landing or selling page. The call to action would be the “Add to cart” button. Finally, the conversion is realized upon showing the purchase confirmation (or thank-you) page.

A lousy campaign equals lousy sales. As they say, perception is everything! Even if you are selling mediocre products, people will buy them if you create the right perception. With the advent of PPC platforms, marketers have the benefit of real-time testing and fine-tuning their online campaigns. Sometimes all it takes is changing one variable for the campaign to be profitable. The world of online marketing is not easy. There is much competition. It also does not help that there are so many variables to consider.

Consider AdWords text ads. You have about 130 characters to make an impression. This sounds easy, but it is not. When you add landing pages to the mix, things get even more complicated. Figure 16-13 shows the kinds of permutations and variations that exist.

Figure 16-13. Variations of ads and landing pages

Starting from the top, you can have from 1 to N number of ads. Each ad has several ad copy elements, as shown in the top right of the figure. Each ad will show 1 to N landing pages. Each landing page could have a number of elements that all play a role in the ultimate conversion rate.

Improving conversion rates is not a one-time deal. To stay competitive, always look for ways to improve on your existing conversion numbers. To do that, you will need to continuously experiment. Starting with AdWords ads, you should try to create different ad variations using all four of the visible fields.

The next thing you can do is try to test entirely different landing pages optimized for the same ads. You want to see whether you can get a better landing page. You can also try to change specific page elements such as images, page copy, and the call to action.

Doing all of this takes time. When making these changes, it is important to have an established baseline. Having a baseline can help you gauge your progress. AdWords provides a tool called Website Optimizer that you can use to perform A/B testing as well as multivariate testing.

The A/B testing method is the simpler of the two forms of testing, as it tests the conversion performance of one or more entirely different landing pages. Google advises A/B testing for sites receiving fewer than 1,000 page views per week.

A/B testing in AdWords is straightforward. Pick your baseline landing page (it could be one of your current landing pages). Create a few alternative pages that effectively perform the same function. Add references to these pages in Website Optimizer. Finally, add references to your conversion page (the end point page) and you are set.

Google suggests a 100-conversions-per-page variation before making any judgments as to the success or failure of your new landing page. Figure 16-14 shows how the entry form looks in Website Optimizer.

Figure 16-14. A/B testing form

After filling out the form, you will be prompted to install the required HTML/JavaScript code. You must install the code in all the URLs for Google to track your conversions.

After you add the code, Google will try to validate that everything is in place. Once your code has been validated, you are ready to test. After starting your testing, come back in a few hours to see how each variation is performing.

Figure 16-15 shows the multivariate testing entry form. There is only one test page to work with. In multivariate testing, you are testing the effects of changing the different sections of a particular page. Google advises multivariate testing for sites receiving more than 1,000 page views per week.

Figure 16-15. Multivariate testing form

A better metric is to use 10 actions per day. The rate of data acquisition on actions, not views, determines the speed of the test. And even at this point, you would only want to do a 2×2 test and not something more complicated, as the length of the test could double (or worse) for every additional variable being tested.

After completing the form, you will need to update your test page and the conversion page with the specific HTML/JavaScript code provided by Google. Validate your code, and you are ready to test.

Because of the higher volume of traffic, multivariate testing allows for more precise analysis, which can lead to identification of elements producing higher conversions. Come back to AdWords in a few hours to start observing the performance of your testing variations.

Observe the competition. Write a script to track ads of your targeted keyword list. Record competitor ads for several weeks. Note changes in ads. Analyze ads that changed. If the ads are not changing, this could mean they are working.

Don’t stop with weeding out the nonworking keywords. Experiment with new keywords. Learn of any new competitors. Learn what their keywords are. Don’t be afraid to gradually lower your bid prices to see the effects on your CTR.

A poor CTR usually means bad ad copy, bad keyword targeting, and bad timing. You can easily create several versions of your ads for your campaign. Use that to your advantage. Learn which ads are converting and which are not. Learn which words are being used in the ads that work and in the ads that do not. In general, the higher your CTR, the lower your average cost-per-click will be.

If you have stiff competition on AdWords, you may want to examine other PPC platforms. Yes, search volumes may be lower, but less competition and more keywords of interest could compensate for the lack of volume.

If you score a successful campaign with ads producing clicks and, ultimately, profits, you may want to consider replicating the campaign across the other platforms—especially Yahoo! and Microsoft. Replicating your winning formula is smart marketing.

Spend your money wisely. You can tell how many competitors are bidding for your keyword simply by clicking on the More Sponsored Links link in Google. You can also use the tools we discussed in Chapter 13 to determine who is bidding for which keywords.

If fewer than eight competitors are competing for specific keywords, in some cases there is no reason to pay more than the minimum. Google gives preference to better-performing ads. Start with the lowest bid and see what position your ad is averaging. Increase your bid a bit and see whether there are any differences in your CTR.

Stay away from high bids. You don’t need to be located at the top of the ladder to achieve a good ROI or a high CTR. People who are serious about finding what they are looking for will skim through all of the ads, especially if the organic results are not giving them what they want. Pay more attention to your ad copy and your landing page copy.

The total number of clicks does not say much regarding the number of targeted clicks. Think like your potential visitor. Make sure the keywords you target are specific enough and are those you would use to find a particular product, service, or piece of information.

Provide answers to your site visitors’ problems. Make that obvious in your ad copy. Make your keywords actionable and straight to the point. Make your ad copy be perceived as the answer to their question.

As we discussed in Chapter 11, utilize common misspellings to capture cheap clicks.

The Google Content Network comprises all participating sites showing Google ads. Using the Google Content Network is not good in all cases. You would be better off to start advertising on Google’s results pages first. Placing ads across the Google Content Network brings in many variables that you do not need to deal with, especially if you are just starting out.

Google ads can appear in all kinds of places that may be detrimental to their respective CTRs. Imagine a news portal site with thousands of unrelated keywords. What Google shows on such sites is not overly predictable.

If you are targeting small exotic countries, you may do better by using the Google Content Network than you would by using Google SERPs (for specific keywords). If you are not sure where to place your ads, run them on all platforms and take corrective action for poorly performing content sites or platforms.

A low conversion rate can mean any number of things, including misleading ad copy, irrelevant keywords, and bad landing pages. You may want to use A/B testing or multivariate testing to examine and improve your poorly performing ads.

Stick with niche content. If you want to have a chance at a successful AdSense site, the rules of content uniqueness apply. You want to drive targeted relevant traffic.

Most people become AdSense-blind sooner or later. The more your AdSense ads look like they’re part of your content, the better. Spend time choosing color schemes that will help with this effect. You want to make it harder for visitors’ eyes scanning your AdSense pages to tell the difference between your page elements and the ads. One way to achieve this is by using the same text colors and text size.

The basic idea behind strategic ad placement is that of forcing the visitor’s eye to scan the ads while looking for specific web page actions. For example, placing ads next to the navigational elements is one of those ways. You could also make your navigation links look similar to the AdSense ad links for added confusion. This approach may be viewed as being against basic website usability principles, however.

According to Google, placing AdSense ads near the top left and middle of a page seems to work best. You can read more about Google’s research at https://www.google.com/adsense/support/bin/answer.py?answer=17954.